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Shares of Avis Budget Group Drop 13% but Management Expects a 2017 Rebound

What happened

Shares of Avis Budget Group, Inc.(NASDAQ:CAR), a provider of car and truck rentals and car-sharing services to businesses and consumers, have shed about 13% of their value Wednesday as of 1:15 p.m. EST after the company's fourth quarter fell short of Wall Street estimates.

So what

Avis' revenue during the fourth quarter checked in at $1.88 billion, missing the $1.96 billion consensus estimate. The company's bottom line also fell $0.02 short of estimates, checking in with adjusted earnings per share of $0.15 during the fourth quarter.

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Much of Avis' financial pain was driven by lower pricing and higher per-unit fleet costs companywide, which wasn't fully offset by the company's international growth. For context, Avis' Americas business segment posted an 8% adjusted EBITDA decline to $101 million, which was partially offset by a 13% international adjusted EBITDA increase to $36 million. Currency exchange also played a factor and had a $7 million adverse impact on the company's adjusted EBITDA compared to what management originally anticipated.

Now what

On the bright side, Avis continues to return some value to shareholders through share repurchases. The company repurchased 2.8 million shares of its stock during the fourth quarter at a cost of $100 million, reducing its shares outstanding by 3%.

Looking forward, Avis expects full-year 2017 revenue to increase by a slight 2% to 3% and per-unit fleet costs to remain about as expensive as 2016. Its full-year adjusted EBITDA is expected to check in between $840 million and $920 million, which would be flat to 10% year-over-year growth compared to 2016.

Ultimately, the company expects to rebound in 2017 after a slightly weaker-than-expected 2016, but in my opinion, it'll likely be during the back half of the year before investors see meaningful bottom-line improvement.

Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Author

As a Motley Fool Industrial Specialist, I use my marketing and business background in the automotive industry to evaluate major automakers and other large industrial corporations. Follow me on twitter for tweets about stocks, cars, sports, and anything I find amusing.
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